Lazy Man and Money

Mark Cuban on Student Debt

by 8 Comments

Last week, my wife was flipping through cable channels and stopped on CNBC. I’d say that 999 out of 1000 times, she’d just continue on. However, CNBC was just starting a phone call with Mark Cuban. We are big Shark Tank fans here, so Mr. Cuban gets the clicker stopped.

Rightfully so.

It’s pretty rare that I disagree with him. On Shark Tank, I sometimes thinks he abandons good ideas and products too quickly, but more often than not, he doesn’t want to work with that entrepreneur due to a personality conflict. To some degree, I can understand it, but if I were him, I’d just be funneling the people I don’t like to qualified associates and still get in the product (assuming it is good).

Today’s topic on CNBC was student debt. Here’s the call with Cuban, so you can play it as you read (I’m going to test your multitasking skills today):

I often don’t write about student debt, because I was blessed enough to get a scholarship. I don’t know all the details and researching those details aren’t of interest to me.

However, what Cuban said struck a cord with me. The 1.2 trillion dollars of student debt held by Americans is amazing. It’s not surprising that if even half of this was put back in the general economy it could do wonders. How many students aren’t able to spend on cars, restaurants, and any of thousands of consumer goods, because they have to instead pay back debt.

It would be one thing if the debt was justified. However, Cuban makes a great point that colleges and universities are building new buildings when they don’t need to. They are paying administrators outrageous salaries. College tuition has far outpaced inflation for years, because it can… they simply saddle the students with more student loans.

Fortunately Cuban also has a pretty good answer. Create a cap of how much students can get in government loans and dial it back over time. As the “easy money” from the students is no longer available, the universities have to get… gasp… frugal and spend the money responsibly. The end result is that the students graduate with less debt and can spend money on housing, cars, clothes, tacos, etc.

I’m sure that colleges and universities are creating jobs with new construction of buildings and such, but I think I’d rather have that money in the students’ hands spreading it through the general economy as a whole.

That’s one of the things that I love about Mark Cuban. In 3 minutes he identified a huge problem with the economy… and he came up with a solution. I’m sure that it isn’t perfect. No one expects to have all the “i”s dotted and “t”s crossed in such a quick phone call.

However, it’s good enough to get started on… if only the people in politics would stop fighting each other and start working towards solutions.

Money Rules by Jean Chatzky Reviewed

by 4 Comments

Money Rules by Jean Chatzky
Money Rules by Jean Chatzky

What’s this? Two book reviews in two weeks? Are you really reading Lazy Man and Money? Have I gone mad?!?!

For years I’ve shunned book reviews. Why? Reading a book in addition to all the blogs and other things I read daily is a lot. It takes me 6 to read a book on a good day (I’m not a fast reader), and then writing up the review can take a couple more. It’s a commitment and not one that fits well with my cat-like attention span.

So why am I reviewing another book this week? There are two reasons. One is that it’s from Jean Chatzky. Despite the fact that I’ve been waiting three years for an email interview that her publicist promised, I think she’s got some of the best advice of any personal finance guru. The other reason I’m reviewing it? It is 109 pages and just about every page consists of just a few sentences. Some are simply pictures. I didn’t time myself, but I’m guessing that almost anyone can get through it in about 40 minutes.

Today’s book is Money Rules: The Simple Path to Lifelong Security by Jean Chatzky. The book itself consists of 94 rules. I’m surprised at the number. You’d think they’d stretch it to 100 or 101 for marketing purposes. It seems like it wouldn’t have been that hard to come up with a few more. Since the book is so short, this review will be as well. The 94 tips in general are pretty good ones, but ones that many would expect to know. For example, there was one about smoking, essentially pointing out the monetary costs to it. I’m on the fence about criticizing it because if it weren’t there, the book might seem incomplete, but by including it, it went a little bit into the common sense territory. I think the best tips were the ones that pointed out the psychology behind spending or saving.

I didn’t find myself agreeing with all the tips though. Tip #19 suggested that you carry $100 bills rather than $20 bills because psychologically it is more difficult to spend that big bill. If you combine that with rule #18, which says that you’ll spend less if you pay in cash rather than credit, you may find yourself not being able to purchase things like lunch. Not every place takes $100 bills and some places limit the change that they have on hand. Another of the rules, #39 was so vague that I don’t understand it all, “Always get three bids. Never take the high one.” It’s in the spend wisely section, so I guess this would mean that I should get three bids for landscaping and never take the most expensive one. That seems to be over simplistic. I’m sure there’s a case where the most expensive of three landscapers does offer a better level of service.

Oh and I like do with all the books I review, just to prove that I did read the book I’ll point out the page with the error. Page 101, which has tip #88 should be “leaving $20,000 to your kids”, not “leaving $20,000 to you kids.” The irony that I’m a great proofreader of other people’s writing and a terrible one of my own is not lost on me.

The Bottom Line: I’m of two minds on this book. On one hand, there’s great value in having something concise and to the point. On the other hand, it’s not a lot of information for $13. I could see it as a gift for someone graduating college. It’s got enough of the beginner tips, and it doesn’t require a commitment to read. It also says, “I spent nearly $15 on you and I care about your financial future”, so that’s a good thing.